Sen. Bill Cassidy Explains His Plan to Fix ‘Mostly Dead’ Social Security. Plus, the Big, Beautiful Bill and RFK Jr.

Sen. Bill Cassidy. (Barron’s)

Sen. Bill Cassidy, a Louisiana Republican, has a proposal to touch what is known as the third rail of American politics: Social Security. Cassidy insists that though he’s from the government, he’s really is here to help, in this case with a bipartisan proposal co-sponsored by Sen. Tim Kaine (D-Va.).

As a physician, Cassidy says he knows when a patient is in dire need—and Social Security is just that.

“You remember the Billy Crystal [character] in The Princess Bride?” Cassidy told me recently. “[The character says] ‘He’s not dead, but he’s mostly dead.’ Now you hate to laugh about something like that, but think of [Social Security as] mostly dead.”

Social Security is close to life support, because “more is going out than going in,” Cassidy says. “In eight years, the Social Security trust fund will be empty. At that point, the amount going out has to adjust downward. And that downward adjustment will be somewhere between 21% and 25% for current and future beneficiaries. And so that is dire.”

I had a chance to speak with Cassidy recently about his plan, the GOP’s “Big, Beautiful Bill,” and controversy at the Department of Health and Human Services as part of our At Barron’s interview series. Perhaps most significantly, Cassidy spoke about Republicans and Democrats working together on legislation. (Hallelujah to that.)

Here are edited highlights of the interview.

Barron’s: Tell us about your Social Security plan, Senator.

Cassidy: We would set up an investment fund separate from Social Security. $1.5 trillion would be placed in it over five years, and it would be invested in the power of the US economy, just like your 401(k), and the proceeds from that would help bail out Social Security. All risk is borne by the investment fund.

If the market goes up or down, the beneficiary continues to receive her promised benefits, and whatever borrowing is required to pay those benefits will be at first, partially, and at the end, fully, offset by the amount of money in this investment fund. That is it in a nutshell. Using the power of the U.S. economy to help bail out that promise to seniors.

Where does that money come from?

That initial $1.5 trillion, our country would borrow. But as it turns out, it does not add to our nation’s debt, because the way our country’s budget works, if you borrow money, but you still have the money in escrow, you could take all the money out of escrow and pay off the debt, and so the money in the escrow will offset the borrowed money.

And so borrowing that $1.5 trillion does not increase our country’s indebtedness.

What happens if there is a prolonged bear market?

We hold this money for 75 years, and so the longest I’m told that the market has been in the doldrums has been, I think, 17 years. In the late 1960s and the ’70s. Let’s assume, though, that we don’t achieve all of our outcomes and instead of paying 70% of our obligation, we only pay 50%. We’re still paying 50% and getting the benefit of that growth.

But most people in the financial markets think we’re being conservative and think that our returns will be greater. We may end up paying even more. So there is uncertainty. But even if we don’t achieve our goal completely, we’re doing a lot better than we’re doing now.

Would this be part of the Social Security fund?

No, this bails out the Social Security program which will continue as folks have come to know it and rely upon it. This is a separate fund but the benefits, the profit from it, feeds back into Social Security, to shore it up.

I want Social Security to last for another 300 years, because don’t we want our country to last for eternity? We may actually evergreen the Social Security trust fund, which is to say, never have to worry about a financial shortfall again.

Are there any templates for this plan?

Yes, the good thing about our program is that not only have other countries done it, but so has the federal government for the railroad, the federal railroad retirement system. Most folks don’t know, but there is a federal retirement system for workers in the railroad industry. There are fewer workers and there are more retirees, just like Social Security now, and there’s a bipartisan commitment to taking their funds and investing it in the market, just like we are doing with these funds.

And what they found was that the market outperformed, that they’re now paying all their scheduled benefits, and they’re firmly in the black. They’ve had an 8.9% or 9.2% return on investment year on average, year over year, since they’ve done this when George W. Bush was president. We’ve got experience with this. It works. The only question is the scale.

What about the backstory working with Senator Kaine? How did this plan come about?

This is a political document as much as a policy document because Republicans and Democrats have always been like, ‘Raise taxes, cut benefits, raise taxes, cut benefits.’ So it’s been a political stalemate. And so this is kind of a solution that finds common ground between the right and the left.

I’ll also point out that in our proposal we actually increase benefits for some and put in work incentives. That is another way to get political support from right and left. For example, we give five years credit for a parent who takes time off from the workforce to help raise their child. Right now, if you don’t work for five years, your long term benefit is cut a little bit.

We give a minimum benefit for those who are very low-income, folks who may have worked minimum wage a couple days a week, and now they’re at risk of living in poverty. We increase them a little bit. We put work incentives in there. Now, if somebody goes back to work, they get $1,000 a month cut in their Social Security paycheck. We eliminate that so when they go back to work, they can get all of their social benefit even as they continue to work. I can keep going. Lots of benefits that both Republicans and Democrats like.

You have a proposal at this point, right? It’s not yet a bill. Where does this stand? When will it be introduced?

We do have legislation. We’ve worked hard at this. There’s still some things that we deliberately leave open because we want others to come on board. There’s five or six or seven of my Republican colleagues who were very supportive two Congresses ago. We had seven Democrats, some of them are retired, so we’ve got to rebuild that a little bit. But Senator Kaine has stepped up, and we have bipartisan and bicameral support. Mike Crapo, who is the chair of the Senate Finance Committee, who has jurisdiction over this, made a public statement to Politico that he would schedule hearings on Social Security.

Lindsey Graham was the head of the [Senate] Budget Committee. He said they’d have hearings. We are working through the process, and this is part of the process. Andy, we’ve got to communicate with the American people so that when they begin to hear about it, they don’t say, ‘Oh my gosh, they’re messing with my Social Security.’ They say, ‘Oh my gosh, they’re saving Social Security. I’m going to get some increased ability to earn some money if I continue to work. Oh, this is going to be a good proposal.’

I want to ask you about the Big, Beautiful bill. You voted for it. It makes cuts in Medicaid, although HHS Secretary Kennedy says there are no cuts. You’re an MD, senator. What do you say about that?

I think it’s better to call them reforms. People want to say cuts, that’s not a cut. We created a $50 billion fund to help pay for rural hospitals to continue to provide care. That’s not a cut. We do have work requirements. We do say, ‘Wait a second, if you’re 18 to 64 you’re able bodied, you’re not disabled, you’re able bodied. You don’t have dependents.’ We asked you to either work, go to school, or volunteer at least 20 hours a week.

Now I’m a doctor who for 20 years of my life, worked in a hospital for the uninsured. I can tell you, if someone is sitting at home when they’re able-bodied without dependents, idle hands are a devil’s workshop. Statistically, they do better, intuitively, they do better if they’re working, volunteering, or going to school at least 20 hours a week. And folks are saying that’s too much to demand.

You and I and others are working to pay for their health care. I don’t think it’s too much to ask them to contribute to their own well being. That’s how I characterize it, and I think it’s a more accurate way.

I want to follow up and ask you a little bit more about Health and Human Services. Two questions here, and again, you’re an MD. Are you concerned about funding cuts there at CDC, FDA and NIH? And about Secretary Kennedy’s vaccine skepticism?

Let’s first talk about potential funding cuts. The president’s budget has come out, but there’s going to be a congressional budget. Always, the president’s budget has different priorities than the congressional budget. But speaking to people at [National Institutes of Health], for example, they understand the importance of biomedical research for the health of our country and the long term fiscal health of our country. I’m not so sure they want less money at NIH. They want the money at NIH to be spent more wisely.

Just one example, if we are able to treat and cure Alzheimer’s, it decreases the drain on Medicare, oh, by 40% or some number like that. So making America healthy, in the case of Alzheimer’s, is something that’s going to do a heck of a lot for our future physical health and fiscal health.

As regards to immunizations, I’ll say that if you want to make America healthy, you have to vaccinate. Vaccines have been established to be safe and effective, and the risk benefit, of either getting measles or getting vaccinated, is a lot better to get vaccinated. I’ll point out that Secretary [Robert F. Kennedy Jr.] has said that the measles vaccine is safe and that people should be immunized. We had two children die in West Texas of measles, which is a vaccine preventable disease. And that’s just a tragedy. And Secretary Kennedy has subsequently said get vaccinated. The vaccine is safe.

So you’re comfortable, essentially, at this point with these positions, in terms of the funding, spending, the budgets, and in terms of the policies Secretary Kennedy’s putting forward?

I would say that I want a more robust immunization policy. I don’t want any shadow of doubt being cast upon settled science that vaccines are safe and effective, and if there are things being said or done which tends to cast those shadows, then that’s going to work against the long term goal of making America healthy.

I’m a doctor. I have seen people die from hepatitis B. I’ve seen people get liver transplants from hepatitis B. And if you get vaccinated for hepatitis B, an extremely safe vaccine, your chance of being infected is like one out of 100,000, so I’m a big believer in making America healthy, and a key component of that is don’t get a vaccine preventable disease.

Senator Bill Cassidy, thank you so much for your time.

Write to Andy Serwer at andy.serwer@barrons.com